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What’s all this buzz about first party data?

Guest User
February 18, 2020
What’s all this buzz about first party data?
Guest User
February 18, 2020
X MIN Read
February 18, 2020
X MIN Read
February 18, 2020
X MIN Read

A recent pivot away from third party data has businesses diving into in-house customer data. This first party data is fresh, hot and a buzzword in digital-based business strategy.

Every digital business collects data directly from and about their users; this is known as “first party data”. The collection of this data is carried out via a variety of methods, including purchase-based data, cookie-based data, website interaction analytics, CRM systems and other business analysis tools. In companies that have a large online user base, this type of data can also come from registration and subscription information.

This powerful information resource is an incredibly valuable way to build an understanding of your customers. In more traditional companies, it can play a crucial role in retargeting campaigns and serve as an essential tool for marketing. For performance-oriented businesses, it also offers a means of building engagement in other industries, such as in brand advertising, e-commerce, and the media and publishing industry, among others. More recently, even companies in the insurance, banking, and personal finance industries have seen benefits from leveraging their first-party data.

With first party data you are able to leverage  data from your users. Companies can use this knowledge from their users, their interests, purchase history, and demographics - to suggest content, offers, or calls to action that will build the kind of loyalty that increases engagement and drives conversion of users into paying customers.

Appropriately leveraged, first-party data will strengthen the accuracy and insight of your customer engagement and drive your ROI.

When did it become all about my current customers?

Traditionally, third party data has been the backbone of most digital acquisition strategies, but it is increasingly clear that the funds used to acquire new customers may have been misspent. According to a recent report by Adobe, the value of returning customers cannot be understated. This may seem counterintuitive at first, after all, as seen below, new customers comprise most website traffic (92% of website customers in the US), while returning and repeat customers only equal 8%.

From Adobe, The ROI from Marketing to Existing Online Customers
From Adobe, The ROI from Marketing to Existing Online Customers

However, when considering the revenue generated by these three customer segments, the relevance of returning and recurring customers grows. The RPV of recurring and repeat customers offers a definite boost to the bottom line.

From Adobe, The ROI from Marketing to Existing Online Customers
From Adobe, The ROI from Marketing to Existing Online Customers

To put it more simply, 41% of revenue is generated by repeat customers, who account for 8% of the total user base. This means that repeat customers generate 5X more revenue within one purchase than a new customer, which highlights the value of customer retention for revenue growth rather than only focusing on customer acquisition.

From Adobe, The ROI on Marketing to Existing Online Customers
From Adobe, The ROI on Marketing to Existing Online Customers

This pattern can be seen beyond the eCommerce industry as recurring customers prove their worth over and over again. Of course, despite their value, this loyal customer base is not always being correctly targeted as a 2019 survey by the International News Media Association (INMA) discovered. According to their report, 59% of publishing companies spend much less on engagement than on acquisition, and publishers will spend 25% more on winning over new customers than on retaining current ones. And they are missing out, for it is companies who have bucked this trend, focusing on fighting churn and building engagement instead who have seen increasing success in both retention and revenue.

Third-party-data-driven strategies to attract new customers do not offer the ROI that first party data from current customers can - and with this data you can keep your users coming back for more. First party data gives companies a chance to communicate better with the user segment that is a key revenue driver - and identifying users who are likely to purchase from the pool of non-paying users.

The bottom line: considering the cost of acquiring new customers - it’s vastly cheaper to keep your regular users coming back for more.

No, really, why is my first party data so great?

Productive marketing strategies cannot exist without understanding the value of the data on which they rely. Companies have been collecting first party data for years, but without necessarily utilizing it effectively. But this data, in real-time or historical, offers a solid foundation on which to yield results, for several reasons:

It’s the right data for you

Businesses that rely on their data are using fresher and higher quality information. While the sample size may be smaller than that of a purchased third party data set, it is, however, entirely 100% relevant to the business.

For example, a company can analyze customers who are browsing their site - let’s assume during the holiday season - and gain insights on how to increase personalization and create offers for this specific segment of users. From this perspective, avoiding the purchase of third party data - that might be less relevant to their interests - is a cost savings benefit that first-party data provides!

It’s fresh

A company’s in-house data can be immediately analyzed. With more advanced third party solutions added to their tech stack, results can be generated in real-time and will yield more significant insights. For example, if a shopper purchases an item from an eCommerce store, this can be immediately registered by the analytics solution.

In terms of customer personalization, this can mean that a specific type of item will no longer be offered in targeted advertising - whether online or on social media or mobile. Third-party data is never this fresh and reactive.

It increases revenue

First party data can power the kind of customer engagement strategy that will yield both loyalty and revenue. Personalized actions and triggers based on first-party data will interact with customers at moments when they are most inclined to be persuaded. For example, publishers can employ dynamic paywalls that will offer engaged readers the opportunity to purchase at the moment their propensity to buy is at its highest level.

It’s low-risk

Major browsers have continued to support anti-tracking measures. The death knell of cookies based on third party data has rung, but first party data is still going strong. Recent changes in the European Union General Data Protection Regulation (GDPR), as well as the California Consumer Privacy Act (CCPA) regarding online user data collection, have continued to suppress third party data. Since first party data collection relies on agreement by users to have their activity and information tracked, it has avoided turbulence.  

Successful implementation of a strategy based on conclusions drawn from first party data is not a pipe dream either. There have been many successful implementations of this type of customer-driven approach. When The New York Times took a look at their traffic, they realized that their famous crossword puzzle was hugely popular with their customers, and spun it off into a separate subscription product. When American broadcaster NBC was able to follow its customers across channels and platforms, they had the data to support a change in their ad currency metric. Then they began charging their advertisers the same prices for online and broadcast ads, ultimately increasing revenues.

How can first-party data help my industry?

First-party data has the potential to benefit digital business across industries and sectors:

Media & Publishing

First-party data enables publishers to carry out all the following: offering personalization, powering content recommendation engines, segmentation of users into specific categories, and attributing results like subscription purchases to particular content.


First party data and the proper follow-on strategies allow you to adopt an omnichannel approach and increase your level of personalization. Building on product interest and purchase history, vendors can create a relevant and personal interaction for a positive experience that generates repeat customers.

Insurance, Banking & Financial Services

Preventing customer churn is a big deal for these three industries. Whether this is losing someone who purchased medical insurance, deposited savings, or put money into an investment portfolio, losing a customer means your competitors are taking them. Using first party data can significantly reduce churn, enabling you to target users who are at risk in a way that’s specific to your customer base rather than generic metrics that may signal churn.

This is especially impactful since most insurers, banks, and financial services providers have high customer acquisition costs, which means that customer retention has considerably more importance than other industries!

Brand Advertising

Ad targeting, remarketing, and building offers tailored to user interests is nothing new. But first-party data can be leveraged to put past purchases and other interactions into play for potential returning customers.

What does a first-party data strategy look like?

Many have already embraced these new ideas with enthusiasm and even with success, yet they still don’t quite understand how it all works or what their first-party data strategy is. However, there are a few strategic constants worth shooting for.

Know the user journey

Analyze how your users reach the moment of purchase. The insights to be gleaned from these journeys can have significant effects in learning how to properly target converting users - and preventing them from falling by the wayside. First-party data must be activated in a way that reveals the user’s entire experience - using the data to increase the efficiency of personalized offers - whatever the industry.

Let the customer lead

Make sure you have a 360 degree understanding of your customers or at least as many degrees as possible. Follow your users across devices and platforms -go omnichannel - and even offline if possible. Segment your results.

Predict what your customers want  

Loyalty often derives from perceived value. When your personalized offer is of sufficient value, you will see retention rates improve. However, staying on top of creating offers that will win over those inclined to churn could require companies and their staff to dig deep.

Triggered calls to action on a website/app fall under this strategy, for example. These automated actions - whether showing a paywall, a chance to enrol in a newsletter, or even promotional inducements - are fired based on first-party data-driven predictive analytics that will ensure that offers launched at the right time to the right person. In this type of case, a user who has been reading an increasing number of news articles could suddenly see a paywall. Or perhaps a user who has been shopping for coats receives an email with discounts on coats and jackets.

Staying ahead of the curve - a few final thoughts

Part of leveraging your first-party data requires you to develop a cohesive policy that will allow the customer to agree to your use of their data. With this strategy in play, you have created a foundation for consent that can hold off breaches and mistakes.

After all, even minor strategy shifts on the back of first-party data can quickly realize results. Taking this further, using deliberate and well-thought-out solutions to leverage your first-party data will strengthen your communication and your overall understanding of users - leading to increasingly more specific user interactions and targeting plus an overall increase in ROI.

Deep BI is a comprehensive data solutions company that offers powerful flexible products for data analysts, product teams and management through a platform incorporating data analytics, a Business Intelligence layer, and a data warehousing platform with a key focus on real-time scoring & data augmentation. Using our Machine Learning and Data Science capabilities we're able to serve customers in the retail, fraud detection and financial market verticals as well as the media and marketing sectors.

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